The present invention represents an improvement in security of negotiable instruments, particularly travelers' checks.
Travelers' checks are negotiable instruments which are purchased by a customer from a bank or other financial institution. The customer has had to sign such checks in two places, at two different times. One signature is provided by the customer when the checks are purchased, and the other signature is provided by the customer for each check which is to be cashed, at the time of cashing. The merchant, salesperson, or other party honoring the travelers' check then compares the two signatures to determine whether they are the same.
Such comparison has been the only way to prevent unauthorized use of travelers' checks after purchase by the customer. Further, prior to purchase, there are no signatures on the checks, so that the travelers' checks must be handled with the same care and level of security as cash.
Various approaches have been taken to enhancing security of negotiable instruments, to provide alternatives or additional measures to mere signature comparison. U.S. Pat. No. 1,542,692 discloses a negotiable instrument (a financial certificate, such as a stock certificate or a bond) which is printed as a single piece and then is separated into two pieces, each of which is void without the other piece. Each of the two pieces has the same serial number on it. Part of each piece consists of a set of detachable coupons, also bearing the same serial number on it. Each piece of the overall certificate is mailed separately to the owner. Obviously, this technique is applicable only to single instruments, and not to multiple instruments.
Other approaches, such as that shown in U.S. Pat. No. 3,950,015, have required the issuance of a separate photo ID by the institution issuing the travelers' checks. While this may facilitate issuance of additional travelers' checks, as indicated in that patent, the issuance of the photo ID represents a significant additional burden for the institution.
A second technique, disclosed in U.S. Pat. No. 3,455,576, is known where periodic payments, as for example mortgage or rent payments, are to be made. As described, a separate label bearing the payee's signature is provided, the label to be affixed to the back of a check, in addition to requiring a separate signature, in order for the check to be negotiable. The check could be color-coded, the color corresponding to the label to be affixed. Only the payee would have the required label, and so only the payee would, theoretically, be able to cash or deposit the check.
Another technique using labels is shown in U.S. Pat. No. 707,891, except that the separate labels contain specific denominations, a plurality of labels thus being required in correspondence to the amount on the front of the check.
While all of the foregoing approaches have merit, none has the feature of providing security from the time of printing to the time of cashing, along with a record keeping function, for negotiable instruments which may be transferred at any time.